When Should A Home-Buyer Opt for A Pre-Approved Loan?
Buying a home is a dream for many of us. It is one of the most important decisions you take in your lifetime. It is not so easy to find a home that matches your convenience and budget. You need to do a proper study of the location, amenities, space required, finances etc. before investing in your dream home.
The decision of buying a home is a costly affair. You might spend a major portion of your savings on buying the property and then take a home loan to finance the rest. Lenders usually check the repaying capacity and the credit history of a customer before pre-approving a home loan.
Should you opt for a pre-approved home loan? Read on to find out.
What Are Pre-Approved Home Loans?
Pre-approved home loans are home loans that are already approved by the lender. This facility is offered to the potential buyers interested to buy a house in Delhi, Bangalore, Chennai or any other city in India.
All you need to do is fill out an application form and submit your eligibility documents. You also need to pay a processing fee for a pre-approved home loan. Lenders run an intensive check on your credit history and creditworthiness. You may also need to furnish financial details and other information like employment status, marital status etc.
After verifying the documents, the lender pre-approves the loan. The lender sends you a sanction letter stating that you are eligible for a loan up to a certain amount.
For example, a lender may have a pre-approved loans facility for old as well as new customers. You fill in an application form and the lender verifies your financials, evaluates the pre-approval application and sanctions a loan that is valid for a certain period, say 4 or 6 months.
After submitting relevant documents for verification, you can avail of the loan within the validity period.
Here is When You Have To Opt for A Pre-Approved Loan:
- To buy a home
It is not advisable to simply consider a pre-approved loan just because you were offered one. If you have been saving for a home and are looking to buy one, a pre-approved loan can help you.
You also save time as once you choose the property; you can quickly start the buying process. You have almost instant access to funds as the validity of a pre-approved loan is usually for a period of 4-6 months.
- For quick funds
Pre-approved home loans are the ones already approved by the lender on a property. You have already submitted necessary documents for the pre-approved loan.
So all you need to do is submit any additional eligibility documents required. This makes the process easy as the loan is approved and disbursed faster.
- Plan well in advance
For a pre-approved loan, you have to file an application and pay a processing fee. Plan well and then apply for a pre-approved loan.
If you choose not to avail the loan later, or miss out on the validity period, you won’t get a refund for the processing fee. You have to identify a property before the expiry date on the sanction letter.
- No uncertainty on loan amount
With pre-approved loans, there is no element of uncertainty. You know the amount of money at your disposal and also whether it fits your budget.
You also know the interest rate for the loan that you are planning to avail. This way you know how much the loan will cost you and can plan your finances accordingly.
To sum it up:
Pre-approved loans have an element of certainty and the borrower can rely on it. With the help of a pre-approved loan, you can easily take a decision and finalize the property within your budget and the validity period.
Category: Housing
